Saturday, August 1, 2009

Who Gets a Piece of the Pie? - The Daily Reckoning Weekend Edition

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The Daily Reckoning
The Weekend Edition - August 1-2, 2009

  • Who gets a piece of the stimulus pie?
  • Never trust an economist over 30, warns the Mogambo...
  • Rob Parenteau with a green shoot worth applauding...
  • There is a new Silk Road rising, says Ben Simpendorfer...
  • Byron King offers a requiem for Ben Bernanke...
  • "We're all jackasses now," declares Bill Bonner...and more!

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    The Daily Reckoning's Highlight of the Week:
    Who Gets a Piece of the Pie?
    Baltimore, Maryland

    It seems that all we hear about is the stimulus money. Where is it going? Who is benefiting from it (since it's clearly not taxpayers)? And when will this stimulus start to stimulate the economy? Bill Bonner explores in the DR's Highlight of the Week, below...

    An article in [Wednesday's] International Herald Tribune tells the story of one area in Tennessee that has gotten stimulus money.

    "The cash that salvaged a county," says the headline. Perry County, southwest of Nashville, must be one of those places you don't want to stop when you're driving across the country. With 25% unemployment and no significant industry, it sounds dreadful - at least from an economic point of view. It might be a nice place to live - if you don't have to work for a living.

    So the county honchos figured the county needed a little stimulus. They managed to lay their hands on cash being passed out by the feds. It doesn't seem to bother anyone that the money belongs to someone else. Nor does the fact that it is now being frittered away in a bunch of make-work projects that nobody wanted to pay for even when they had some money. Nor that the stimulus-assisted businesses of Perry County now have an unfair advantage over their honest competitors in other parts of the state.

    The Armstrong Pie Company, for example, used taxpayers' money to expand: "New workers [hired with stimulus money] have helped the company triple its pie production and expand its reach through central Tennessee."

    A quick question: what happened to the pie companies that lost market share to Armstrong? And another: how is the economy any better off by stimulating one pie company to make more pies at the expense of other pie companies? And a final one: even if total pie consumption goes up - a larger pie! - where's the benefit?

    The whole thing is a scam!

    [The government will just keep on using taxpayers' money to pay for the stimulus - and what are you going to see in return? Most likely...a whole lot of nothing. You'll be better off setting up your own 'personal bailout' package...and you'll find all the resources to do just that right here.]
    The above is just an excerpt from Bill's standout essay from this week. You can read it in its entirety on The Daily Reckoning site - it's an essay you don't want to miss. Get it here.

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    ALSO THIS WEEK in The Daily Reckoning: Well, we certainly hit the ground running following last week's AF Investment Symposium. This week's guest contributions covered everything from the rise of a new Silk Road to Ben Bernanke's town hall appearance this past Sunday. See all the essays, below...

    Don't Trust Economists Over 30
    by The Mogambo Guru
    Tampa Bay, Florida

    "...the last 30 years of macroeconomics as practiced by these econometric, computer-head lunatic savants was "spectacularly useless at best, and positively harmful at worst" which is still sugar-coating it, as far as I am concerned..."

    A Green Shoot Worth Applauding
    by Rob Parenteau
    San Francisco, California

    "...we are finding evidence that business capital spending has been cut so sharply over the prior three quarters that it is reasonable to expect some replacement demand to begin showing up. While fears of a relapse are still building, that is one green shoot we believe Dr. Richeb├Ącher would deem worth applauding."

    The Rise of a New Silk Road
    by Ben Simpfendorfer
    Hong Kong, China

    "The Middle East's imports from China are still growing, albeit in low single-digit figures, even as the United States imports from China collapse at near twenty percent rates relative to last year's levels. And Chinese manufactures are searching for new markets in the Middle East as a result. It is just one more sign of the change in demand."

    Requiem for Ben Bernanke, and His "Second Great Depression"
    by Byron W. King
    Pittsburgh, Pennsylvania

    "Mr. Bernanke and the Fed had a clear policy choice last fall. They could do a big bailout or not. The Fed chose to open Door No. 1 and bail out Wall Street. This was at the expense of Main Street, let alone the national balance sheet."

    We Are All Jackasses Now
    by Bill Bonner
    Paris, France

    "In the past, workers were quick to move to where the jobs were. The Sun Belt traditionally bounced back first. But Florida, California, Arizona and Nevada have been flattened even more than the rest of the nation - by record foreclosures, government cutbacks and bankruptcies. Now, the jobless stay put...and stay unemployed."


    We are going to be briefer than usual this week because we are still playing catch-up after last week's AF Investment Symposium. It was so nice to get to meet and talk to so many of our dear readers - thanks to all who stopped by our writing area to say hello!

    And in case you didn't have a chance to get out to Vancouver for this year's conference, you can still be privy to all the advice and insights that were packed into the main session presentations, never fear - we've got you covered. You can purchase these presentations in CD or MP3 format. Click here for all the info.

    Enjoy your weekend,

    Kate Incontrera
    The Daily Reckoning

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